The current environment fails to offer the appropriate equitable incentives for all stakeholders involved in what is currently classified as card-not-present transactions to innovate and invest in the best fraud prevention technologies.
Minneapolis, MN (PRWEB) February 24, 2017
Online and mobile commerce sales continue to grow at a rapid pace in the United States. According to a report from the U.S. Department of Commerce, U.S. online retail sales nearly quadrupled in the decade from 2005-2015, and today account for roughly $340 Billion, or 10.6%, of total retail sales.
As customers seek shopping experiences that offer more convenience, the retail community has introduced new service models to deliver on those evolving customer expectations, and it is critical the payments ecosystem keep pace with these changing dynamics. There is tremendous potential to provide better security in online and mobile commerce environments because of the enhanced technology, authentication tools, and data available on these digital commerce transactions.
The Merchant Advisory Group (MAG), which represents over 100 of the largest merchants and franchisors in the United States, recently formed a task force focused on these types of sales. MAG merchants participating in the task force represent well over $100 billion in e-commerce revenue annually, and that number will only continue to grow as customers migrate to digital channels.
A primary focus of the task force will be to collaborate and define a new approach to balancing the risk/reward relationship for digital commerce transactions that will incent an equitable co-investment in authentication strategies among stakeholders in the ecosystem. Currently, card network acceptance rules have merchants who conduct digital remote commerce footing the majority of the costs and fraud prevention investment for online payment acceptance, while also bearing the majority of fraud losses.
“The current environment fails to offer the appropriate equitable incentives for all stakeholders involved in what is currently classified as card-not-present transactions to innovate and invest in the best fraud prevention technologies,” noted Liz Garner, SVP of Policy & Public Affairs at the MAG. “It is critical that parties involved in online commerce work together to deter fraud and the use of fraudulent account credentials in online and mobile environments to provide a better experience for U.S. shoppers.”
While many large merchants are very familiar with operations and risks associated with these transaction environments, businesses new to digital acceptance channels have a learning curve to manage to get their business online. Another goal of the task force is to provide education materials for those merchants new to the online transaction space.
The card-not-present classification is dated terminology that refers to a time when cardholders would have to call or fax in an order and provide their credit or debit card number. These transactions have historically been considered higher risk because the person was not present with their card at the time of the sale. However, application of this terminology to transactions where people are shopping from their desktop computer, tablet or mobile phone has never been appropriate and needs to change. The potential to authenticate a transaction in any of these environments is much greater than over the phone or via fax because stakeholders have even more tools, such as IP address, email, device type, etc. to authenticate the cardholder than they do for in-person sales.
Educating the marketplace on the convergence of in-person and digital commerce to ensure the proper incentives exist for U.S. merchants, issuers, and other stakeholders to bring forward the best digital experiences for our customers will be a top priority for the task force in 2017.
About the Merchant Advisory Group
The Merchant Advisory Group (MAG) was founded in 2008 by a small visionary group of merchants in the payments field dedicated to driving positive change in payments through multi-stakeholder collaboration. Today, the MAG represents over 112 of the largest U.S. merchants who account for nearly $2.6 Trillion in annual sales at over 430,000 locations across the U.S. and online. Roughly $1.5 Trillion of those sales are electronic representing over 41 Billion card payments. MAG members employ nearly 11.5 million associates.